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24 April, 06:55

XYZ Company purchased a new machine on January 1, 2020 for $160,000. The machine was assigned a 40-year life and a $3,000 residual value. XYZ Company will depreciate the machine using the double-declining balance depreciation method. Calculate the amount of accumulated depreciation related to the new machine that would appear in XYZ Company's December 31, 2023 balance sheet.

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  1. 24 April, 07:07
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    Accumulated depreciation at December 32, 2023 = 29679

    Explanation:

    machine = 160000

    useful life = 40 years

    residual value = 3000

    straight-line depreciation rate = (160000 - 3000) : 40

    = 3925 per year

    Annual depreciation rate = 100% : 40 = 2.5%

    double-declining rate = 2 * 2.5% = 5%

    Depreciation for 2020 = 5% * 160000 = 8000

    Depreciation for 2021 = 5% * (160000 - 8000) = 7600

    Depreciation for 2022 = 5% * (160000 - 8000 - 7600) = 7220

    Depreciation for 2023 = 5% * (160000 - 8000 - 7600 - 7220) = 6859

    Accumulated depreciation at December 32, 2023

    = 8000 + 7600 + 7220 + 6859

    = 29679
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